ABC, Inc is asking for an investment of $500,000 from your venture capital firm. The entrepreneurs estimate that the terminal value of the company in 3 years will be $2,000,000. Because this investment is very risky, you want to earn a return of 40% per year on your investment.

What is your venture capital firms desired fraction of ownership in the firm?

Suppose that the founders want 150,000 shares. How many shares would your venture capital want?